Top brass of Hyderabad-based Palred Technologies were found by SEBI to have used unpublished price sensitive information to unlawful gains of over Rs2.2 crore
Market regulator Securities and Exchange Board of India (SEBI) has held guilty chairman and managing director (CMD) and chief executive (CEO) of Palred Technologies Ltd (PTL), a micro-cap which runs LatestOne.com, an online mobile accessories store.
According to SEBI, Palred's CMD Palem Srikanth Reddy and CEO Ameen Khwaja were part of a cartel of 15 people termed as 'insiders' and were in possession of unpublished price sensitive information (UPSI) on the basis of which they traded in the scrip of PTL.
In an order, Prashant Saran, whole time member of SEBI said, "...I, in exercise of the powers conferred upon me by virtue of Section 19 read with Sections 11(1), 11(4)(d) and 11(B) of the SEBI Act, 1992, hereby order to impound the alleged unlawful gains of a sum of Rs2.22 crore (alleged gain of Rs1.66 crore plus interest of Rs56.55 lakh from the date of buy transactions to 31 January 2016), jointly and severally from the (15) persons tabulated in the paragraph above. If the funds are found to be insufficient to meet the figure of unlawful gains, as directed above, then the securities lying in the demat account of these persons shall be frozen to the extent of the remaining value.
Besides Palem Srikanth Reddy and CEO Ameen Khwaja, SEBI has named Noorjahan A Khwaja, Ashik Ali Khwaja, Rozina Hirani Khwaja, Shefali Ameen Khwaja, Shahid Khwaja, Pirani Amyn Abdul Aziz, Mohan Krishna Reddy Aryabumi, Karna Ramanjula Reddy, Umashankar S, Raja Lakshmi Srivaiguntam, Kukati Parvathi, Prakash Lohia and P Soujanya Reddy in the order.
SEBI investigation revealed that Palem Srikanth Reddy, Mohan Krishna Reddy and P Soujanya Reddy (promoter of PTL and mother of Palem Srikanth Reddy) were the persons privy to the ‘slump sale of software solutions business to Kewill group’. Palem Srikanth Reddy was also privy to the information about the declaration of dividend. “...Palem Srikanth Reddy had communicated or counselled, directly or indirectly the UPSI to one Ameen Khwaja, his relative Kukati Parvathy (aunt of Palem Srikanth Reddy) and others (hereinafter collectively referred to as the ‘suspected entities’). Ameen Khwaja appears to have not traded in the scrip of PTL during the period of investigation. However, his immediate family members namely Noorjahan A Khwaja, Ashik Ali Khwaja, Rozina Hirani Khwaja, Shefali Ameen Khwaja and Shahid Khwaja (hereinafter collectively referred to as ‘Khwaja group’) were found to be trading in the scrip of PTL during the UPSI period," SEBI said.
The market regulator also found that Pirani Amyn Abdul Aziz was connected to Ameen Khwaja through mutual friends on ‘Facebook’. "He (Pirani Amyn Abdul Aziz) was employed with Deloitte Tax Services India Pvt Ltd (a group company of Deloitte Touche Tohmatsu India Pvt Limited, which had conducted the due diligence of PTL during the
slump sale). During the course of investigation, Pirani Amyn Abdul Aziz failed to reply to the specific details, as sought by SEBI," it said.
Earlier, on 9 December 2013, the Company changed its name from Four Soft Ltd to PTL.
Palred Technologies closed Tuesday 7.5% down at Rs63.9 on the BSE, while the benchmark Sensex ended the day 1.1% down at 24,020.